New Look at the Economic Well-Being of the Elderly in the
United States, 1989-2001

Edward Wolff

Ajit Zacharias

Abstract

We examine the economic well-being of the elderly, using the Levy
Institute Measure of EconomicWell-Being (LIMEW). The LIMEW is
a comprehensive measure that incorporates broader definitions of income,
from wealth, government expenditures, and taxes, than standard
income and also includes the value of household production. We find
that the elderly are much better off relative to the non-elderly according
to the LIMEW than according to the money income or the Census
Bureau’s “Extended Income” (EI) concept. The main reason is the
much higher income from wealth and net government expenditures
for the elderly than for the non-elderly. Both mean and median measures
of the LIMEW also grew much faster for the elderly than for the
non-elderly over the period 1989-2001. In contrast, growth rates of
money income were actually greater for the non-elderly than for the
elderly over this period. We also find that the degree of inequality in
the LIMEW is substantially higher among the elderly than among the
non-elderly. In contrast, inequality in EI is virtually identical between
the two groups. Inequality in the LIMEW grew for both the elderly
and the non-elderly, while the inequality in EI (as well as in standard
money income) grew only for the latter group.